Impact on employment numbers is minimal; the bigger effect is to shut down small businesses and transfer employment to large corporations, which is an efficiency improvement in most cases anyway.
I was working a min wage job during a min wage hike. None of us lost our jobs, but hours were cut for almost everyone, and overtime was eliminated. We all worked a hell of a lot harder because there were fewer people on each shift.
Yes, I recall that happening, too. But I also recall that it evened out - within a year, most of the negative effects were gone and everything was as it had been (though there was still less overtime. The full-timers didn't get more money out of it - they got more time off the job, without paying as big a price as they would have without the wage increase.)
Yes, but some people don't have the luxury of waiting a year for it to even out. My take home pay was cut by almost $50, which is a lot when you are working min wage and only bringing home ~ 230 . I went from 38-40 hours a week to about 30. Luckily, I had Gord to help me out (this was before we got married). But for a lot of other people that can mean the difference between having electricity or not.
So, if we leave the minimum wage alone, more people are able to work, but at pay levels that put them under the poverty line and in jobs where the security and advancement possibilities are few to none. If we raise it, those people experience more hardship for a year or so, a few jobs switch from small-business to large ones, but the end result is more money in the pockets of those working at that level.
I think, as a lawmaker, I'd err on the side of raising the wage, because inflation doesn't stop and in the long run, it will be better. But I'd feel for the people hurt by it.
I think it's a clumsy solution even in the long run. There are better ways to achieve the same goal of making sure workers have enough to live on, I think, such as the negative income tax.
One of the downsides of the minimum wage law is that many people don't need minimum wage and are willing to work for less; teenage babysitters and busboys, for example, don't need as much to live on as an adult Wal-Mart worker with a wife, kids and elderly parents, but the minimum wage affects the employers of babysitters and busboys too - who can often least afford it. They therefore tend to respond either by breaking the law by hiring on the black market, or they fire their staff. Ever wonder why almost no newspapers hire children to deliver the papers anymore? Why pay a high minimum wage to a ten year old with a bike when you can pay it to an adult with a car who can do a route five times bigger?
One suggestion that has been put forward has been to expand child labour laws. There are already detailed rules for employers around how many hours a minor can work and what kinds of work they can do. This benefits adult workers by making them not have to compete with teenagers; if the jobs had completely separate classifications, you could have a lower minimum wage for the low-commitment, low-hour, highly safe jobs suitable for minors (ideally, large corporations would be prevented from having many jobs in this category), and a higer minimum wage for adults with families whose job absorbs more of their life. This is a flawed solution too, but at least one benefit of it is the reduction in harm to small businesses and households hiring occasional staff, and a clear recognition of which jobs should reasonably be expected to support a family.
Didn't Ontario used to have two separate minimum wages? I have a distinct memory of earning just over $4 per hour, with a cheque from the school board so it wasn't black-market (I shelved books in the school library) while the adult minimum wage was over five dollars.
Many of the jobs that are suitable for children/teens, like my library job, are now instead done with volunteers. While I see the benefits of that, I also had a lot of benefit from working in a library at the age of fourteen, earning enough to take pressure off the family budget by buying my own clothes and incidentals.
Negative income tax: not only do you not pay taxes, but if you earn below a certain threshold, the government will pay you?
I'd like to see more discussion about this in the political sphere. Too often, everyone gets focused on one aspect of the problem - low minimum wage - so that solutions which take that aspect out of the dialogue aren't considered.
Negative income tax: not only do you not pay taxes, but if you earn below a certain threshold, the government will pay you?
It depends on the implementation method, of which many have been proposed, but usually it's the opposite; the government gives everyone X amount, which is enough to live on if you are extremely thrifty and frugal, and then taxes Y% of everything you earn with no regard to tax brackets. The rich end up giving back all of X and more, of course, and the poor keep X but have to give up Y% of their earnings like everyone else.
Libertarians like me bring up the negative income tax all the time in the political sphere, but then liberals yell at us because of the "poor people paying the same Y% as the rich" factor, and conservatives yell at us that no one would bother to work if they could live on X. :) But I do think this is the fairest approach to wealth redistribution anyone has yet come up with.
Hmmm... mostly it's in economic textbooks, I don't really know of a lot of links. You might try this one: Negative Income Tax (http://www.globaljusticemovement.org/subpages_articles/nit.htm)
I've always strongly resented that argument. Such short-sighted thinking just proves that some people will rationalize any BS to maintain their comfy status quo. Heaven forfend we should actually support people on the bottom rung and prevent wide spread poverty because some employers will be peeved that more of their profits are being devoured by those ingrates who should be grateful they even have a job.
I had to shake my head at the food bank comments in the linked thread. It takes time during open hours and the resources to get to the food bank to take advantage of that kind of service. Someone working too hard and at the mercy of public transportation will have a much harder time getting there - to the point of not using it.
Actually it kind of looks like it had a short-term negative impact, but no long-term impact, though the question is always a case of what-would-have-been-otherwise.
I have heard convincing arguments that a high-minimum wage makes it much more difficult for teenagers and seniors to get part-time work. They tend to be less capable and the minimum prevents them from doing work at a lesser rate, which they might want to do. That's theoretical, of course.
The suggestion that minimum wage hikes hurt small businesses, is generally wrong though, very few small businesses actually pay their employees minimum wage. The exception normally being franchise owners. Most other small businesses pay their employees more than minimum wage.
The argument that minimum wage doesn't affect employment levels is at it's core untrue (if it weren't we'd just raise the minimum wage to $100 dollars and everybody would be rich), and smacks of idealistic tunnel vision. Raising the income of a large section of the population, who also happen to be the people most likely to frequent fast food restaurents, however, can have a counter-acting influence to the depressing effect of the minimum wage hike. If you costs go up 10% but so do your sales, you're making more money than you were before.
Employment rates are affected by many inter-dependent factors.
There's also the question of whether it has real benefits or not. If raising the minimum wage causes a rise in the inflation rate which eats up the value of the raise, then have you really accomplished anything?
"There's also the question of whether it has real benefits or not. If raising the minimum wage causes a rise in the inflation rate which eats up the value of the raise, then have you really accomplished anything?"
Inflation always has more than one cause, so this argument doesn't hold water.
urban_homestead suggested that a better response is to separate jobs for kids (or seniors) from jobs that people are actually living on. That makes sense to me.
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(no subject)
Date: 2007-01-05 01:33 pm (UTC)(no subject)
Date: 2007-01-05 01:59 pm (UTC)There will always be numbers on someone else's side.
Wages aren't what kill an employer here so much as the benefits and taxes.
Smaller businesses would probably just have more people off the books.
(no subject)
Date: 2007-01-05 02:28 pm (UTC)(no subject)
Date: 2007-01-05 02:39 pm (UTC)(no subject)
Date: 2007-01-05 03:11 pm (UTC)(no subject)
Date: 2007-01-05 03:16 pm (UTC)It's a tough choice.
(no subject)
Date: 2007-01-05 03:26 pm (UTC)(no subject)
Date: 2007-01-05 03:30 pm (UTC)(no subject)
Date: 2007-01-05 04:10 pm (UTC)One of the downsides of the minimum wage law is that many people don't need minimum wage and are willing to work for less; teenage babysitters and busboys, for example, don't need as much to live on as an adult Wal-Mart worker with a wife, kids and elderly parents, but the minimum wage affects the employers of babysitters and busboys too - who can often least afford it. They therefore tend to respond either by breaking the law by hiring on the black market, or they fire their staff. Ever wonder why almost no newspapers hire children to deliver the papers anymore? Why pay a high minimum wage to a ten year old with a bike when you can pay it to an adult with a car who can do a route five times bigger?
One suggestion that has been put forward has been to expand child labour laws. There are already detailed rules for employers around how many hours a minor can work and what kinds of work they can do. This benefits adult workers by making them not have to compete with teenagers; if the jobs had completely separate classifications, you could have a lower minimum wage for the low-commitment, low-hour, highly safe jobs suitable for minors (ideally, large corporations would be prevented from having many jobs in this category), and a higer minimum wage for adults with families whose job absorbs more of their life. This is a flawed solution too, but at least one benefit of it is the reduction in harm to small businesses and households hiring occasional staff, and a clear recognition of which jobs should reasonably be expected to support a family.
(no subject)
Date: 2007-01-05 06:27 pm (UTC)Many of the jobs that are suitable for children/teens, like my library job, are now instead done with volunteers. While I see the benefits of that, I also had a lot of benefit from working in a library at the age of fourteen, earning enough to take pressure off the family budget by buying my own clothes and incidentals.
Negative income tax: not only do you not pay taxes, but if you earn below a certain threshold, the government will pay you?
I'd like to see more discussion about this in the political sphere. Too often, everyone gets focused on one aspect of the problem - low minimum wage - so that solutions which take that aspect out of the dialogue aren't considered.
(no subject)
Date: 2007-01-05 07:24 pm (UTC)It depends on the implementation method, of which many have been proposed, but usually it's the opposite; the government gives everyone X amount, which is enough to live on if you are extremely thrifty and frugal, and then taxes Y% of everything you earn with no regard to tax brackets. The rich end up giving back all of X and more, of course, and the poor keep X but have to give up Y% of their earnings like everyone else.
Libertarians like me bring up the negative income tax all the time in the political sphere, but then liberals yell at us because of the "poor people paying the same Y% as the rich" factor, and conservatives yell at us that no one would bother to work if they could live on X. :) But I do think this is the fairest approach to wealth redistribution anyone has yet come up with.
(no subject)
Date: 2007-01-05 07:47 pm (UTC)(no subject)
Date: 2007-01-05 08:02 pm (UTC)(no subject)
Date: 2007-01-05 05:03 pm (UTC)Oops. Seems I still have that button. Sorry.
Lee.
(no subject)
Date: 2007-01-05 05:44 pm (UTC)Lies, Damn Lies and Statistics?
Date: 2007-01-05 06:15 pm (UTC)I have heard convincing arguments that a high-minimum wage makes it much more difficult for teenagers and seniors to get part-time work. They tend to be less capable and the minimum prevents them from doing work at a lesser rate, which they might want to do. That's theoretical, of course.
The suggestion that minimum wage hikes hurt small businesses, is generally wrong though, very few small businesses actually pay their employees minimum wage. The exception normally being franchise owners. Most other small businesses pay their employees more than minimum wage.
The argument that minimum wage doesn't affect employment levels is at it's core untrue (if it weren't we'd just raise the minimum wage to $100 dollars and everybody would be rich), and smacks of idealistic tunnel vision. Raising the income of a large section of the population, who also happen to be the people most likely to frequent fast food restaurents, however, can have a counter-acting influence to the depressing effect of the minimum wage hike. If you costs go up 10% but so do your sales, you're making more money than you were before.
Employment rates are affected by many inter-dependent factors.
There's also the question of whether it has real benefits or not. If raising the minimum wage causes a rise in the inflation rate which eats up the value of the raise, then have you really accomplished anything?
Re: Lies, Damn Lies and Statistics?
Date: 2007-01-05 06:54 pm (UTC)Inflation always has more than one cause, so this argument doesn't hold water.
Re: Lies, Damn Lies and Statistics?
Date: 2007-01-05 07:33 pm (UTC)Re: Lies, Damn Lies and Statistics?
Date: 2007-01-05 07:48 pm (UTC)